Fibre-optic cables are producing a vast increase in the amount of bandwidth available. Made of glass so pure that a sheet of it 70 miles thick would be as clear as a window-pane, and the solitary strand of optical fibre the width of a human hair can carry 1,000 times as much information as all radio frequencies put together. This expansion of bandwidth is what is making two-way communication, or interactivity, possible.
Neither digitization nor fibre optics is new. But it was only this year that America's two biggest cable-TV owners, TCI and Time Warner , said they would spend $2 billion and $5 billion respectively to deploy both technologies in their systems, which together serve a third of America's 60m cable homes. Soon, some TCI subscriptions will be wired to receive 500 channels rather than the customary 50; Time Warner will launch a trail full-service network in Florida with a range of interactive services.
These two announcements signaled the start of a mad multimedia scramble in America, home market to many of the world's biggest media, publishing, telecoms and computer companies, almost all of which have entered the fray. The reasons are simple: greed and fear: greed for new sources of revenue; fear that profits from current businesses may fall as a result of reregulation or cut-throat competition.
Multimedia has already had a profound affect on how these businesses interact with one another. Mergers such as Time Warner, Turner Broadcasting, and Paramount have set the stage. These companies continue the race to be the first to lay solid infrastructure, and set new industry standards. Following in the shadows will be mergers between: software, film, television, publishing, and telephone industries, each trying to gain market share in the emerging market.
So far, most firms have rejected the hostile takeovers that marked the media business in the 1980s. Instead, they have favored an array of alliances and joint ventures akin to Japan's loose-knit Keiretsu business groupings.